Jakarta – The Institute for Essential Services Reform (IESR) welcomes the issuance of Minister of Energy and Mineral Resources Regulation No. 10 Year 2025, which regulates the energy transition roadmap for the electricity sector. However, IESR reminds that the acceleration of coal-fired power plant (PLTU) retirement must be accompanied by strengthening new and renewable energy (NRE) funding and infrastructure.
“This is a monumental step that provides a clear legal framework for the transformation of the national electricity system,” IESR Executive Director Fabby Tumiwa said in a written statement on Wednesday, 23 April.
The regulation released by Minister of Energy and Mineral Resources Bahlil Lahadalia is a derivative of Presidential Regulation No. 112 of 2022. In this regulation, the government sets a strategy for the gradual retirement of PLTU operations to achieve the net-zero emission (NZE) target by 2060 or sooner.
One of the early realisations of the regulation is the decision to retire the Cirebon I PLTU (650 MW) with the Energy Transition Mechanism (ETM) scheme.
“The decision to approve the early retirement of PLTU Cirebon I is proof that early termination can be done technically, economically, and legally,” Fabby explained. He also added that the planning process for the early retirement of this PLTU has been going on since 2021.
While IESR fully supports the roadmap, it emphasises that the following steps should focus on accelerating the development of renewable energy plants and strengthening the national electricity grid, mainly to accommodate intermittent renewable energy sources such as solar and wind.
“We cannot just turn off the PLTU without preparing a replacement. Renewable energy must replace the lost capacity, or our system will experience a supply crisis by 2035,” said Fabby.
Closing 72 power plants, USD 27.5 billion is needed
According to the IESR study, to keep the Earth’s temperature from rising more than 1.5°C, Indonesia needs to stop operating 72 coal-fired power plants with a total capacity of 43.4 GW between 2022 and 2045.
Of these, 18 PLTUs with a capacity of 9.2 GW are recommended to stop operating in 2025-2030. These consist of 8 PLTUs owned by PLN and 10 privately owned PLTUs.
The estimated total cost of PLTU’s early retirement will reach USD 27.5 billion by 2050, with around USD 18.3 billion coming from private PLTU and USD 9.2 billion from PLTU owned by PLN.
“The initial investment is indeed large, but if calculated as a whole, we can save up to USD 96 billion in reduced health costs and energy subsidies,” Fabby said.
IESR reminds that public funds, such as those from the state budget or state equity participation (PMN), should be used strategically to encourage clean energy, not just to close PLTU.
“If the funds are only to close the PLTU without building renewable-based replacement plants and strengthening the network, it is like moving money from the left pocket to the right without results,” Fabby emphasised.
Flexible PLTU operation is a medium-term solution
While waiting for early retirement to be realised, IESR also suggests a flexible PLTU operation approach. This makes PLTU a backup that follows the rhythm of solar and wind energy production. This model allows for wider integration of renewable energy without jeopardising system stability.
“PLTU is no longer the backbone, but a supporter. This will encourage the transformation of electricity operating systems that are more adaptive to green energy,” said Fabby.
IESR emphasised the importance of a just energy transition, which considers the socio-economic impacts on communities dependent on the coal sector.
“This roadmap is a start. We need to ensure that at every stage, clean energy development runs in parallel with the protection of affected communities and the sustainability of national energy supply,” Fabby said. (Hartatik)
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